`Case 1:22-cv-00252-MSG Document 57 Filed 03/02/23 Page 1 of 3 PageID #: 1000
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`IN THE UNITED STATES DISTRICT COURT FOR THE
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`DISTRICT OF DELAWARE
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`ARBUTUS BIOPHARMA CORPORATION
`AND GENEVANT SCIENCES GMBH,
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` Plaintiffs,
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`MODERNA, INC. and MODERNATX, INC.
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`Defendants.
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` C.A. No. 22-252 (MSG)
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`UNITED STATES’ LETTER IN RESPONSE TO THE COURT’S ORDER, D.I. 51
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`March 2, 2023
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`DAVID C. WEISS
`United States Attorney
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`MICHAEL GRANSTON
`Deputy Assistant Attorney General
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`GARY L. HAUSKEN
`Director
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`PHILIP CHARLES STERNHELL
`Assistant Director
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`HAYLEY A. DUNN
`KAVYASRI NAGUMOTU
`Trial Attorneys
`Commercial Litigation Branch
`Civil Division
`U.S. Department of Justice
`Washington, DC 20530
`Telephone: (202) 307-0342
`Facsimile: (202) 307-0345
`Email: Gary.L.Hausken@usdoj.gov
` Philip.C.Sternhell@usdoj.gov
` Hayley.A.Dunn@usdoj.gov
` Kavyasri.Nagumotu@usdoj.gov
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`Case 1:22-cv-00252-MSG Document 57 Filed 03/02/23 Page 2 of 3 PageID #: 1001
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`Dear Judge Goldberg:
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`The Government writes in response to the Court’s Order (D.I. 51), which directed the
`Government and the parties to address “the impact of the Government’s Statement of Interest on
`the scheduling in this matter.” As noted in the Initial Pretrial Conference, the Government submits
`that the Statement of Interest fully resolves the questions raised by the Court and Plaintiffs at the
`conference with respect to the applicability of 28 U.S.C. § 1498 to Contract No. W911QY-20-C-
`0100 (the ’-0100 Contract).
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`As restated during the conference, the Government asserts that Moderna acted with
`Government’s express authorization and consent in its performance of the ’-0100 Contract, as
`evidenced by the inclusion of FAR clauses 52.227-1 and 52.227-1, Alternate I, and as expressed
`in the Statement of Interest. The Government contracted for and received delivery of vaccine as
`prescribed in the ’-0100 Contract, demonstrating that such procurement was “for the Government.”
`The vaccine so produced was made with the authorization and consent of the Government and
`accepted by the Government. Accordingly, the requirements of section 1498 are satisfied, and
`Plaintiffs’ infringement claims against Moderna relating to vaccine delivered under the ’-0100
`Contract are properly before the United States Court of Federal Claims.
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`During the conference, Plaintiffs argued that discovery is required to determine “whether
`Moderna was under the Government’s control” during development and testing of the accused
`vaccines, and that this would elucidate whether the vaccine was “for the Government.” This is
`incorrect. Whether a contractor was under “Government control” is only an issue where implied
`authorization and consent is alleged. In such cases, authorization and consent may be “implied by
`necessity” where the action of the Government causes the infringement, although no express
`contract provision grants authorization and consent. See also IRIS Corp. v. Japan Airlines Corp.,
`769 F.3d 1359, 1362 (Fed. Cir. 2014) (“[The contractor] cannot comply with its legal obligations
`without engaging in the allegedly infringing activities.”); Bereslavsky v. Esso Standard Oil Co.,
`175 F.2d 148, 149 (4th Cir. 1949) (compliance with government directives resulted in
`infringement); see generally Auerbach v. Sverdrup Corp., 829 F.2d 175, 180 (D.C. Cir. 1987)
`(discussing copyright authorization and consent provision of section 1498(b)).
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`Here, the ’-0100 Contract itself—an express procurement contract between Moderna and
`the Government—demonstrates that the procurement of vaccine doses was for the “benefit of the
`Government,” regardless of whether the Government “controlled” Moderna. Indeed, where there
`is an express grant of authorization and consent, the question of whether a procurement contract
`is for the benefit of the Government is a truncated inquiry. Sevenson Env’t Servs., Inc. v. Shaw
`Env’t, Inc., 477 F.3d 1361, 1365–66 (Fed. Cir. 2007) (holding that the Government’s contracts for
`and receipt of waste remediation services were the only facts relevant to the “for the Government”
`inquiry when the contracts included express authorization and consent clauses). “[W]here
`infringing activity has been performed by a government contractor pursuant to a government
`contract and for the benefit of the government, courts have all but bypassed the separate inquiry
`into whether infringing activity was performed ‘for the Government.’” Id. No further discovery
`as to “Government control” is necessary.
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`Case 1:22-cv-00252-MSG Document 57 Filed 03/02/23 Page 3 of 3 PageID #: 1002
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`We also understood Plaintiffs to argue that there may be claims arising from the ’-0100
`Contract related to indirect infringement (either contributory or induced infringement)
`notwithstanding the applicability of section 1498. This is incorrect under the facts alleged in the
`Complaint, as Moderna’s obligations were outlined in the ’-0100 Contract, and any liability for
`patent infringement performed in fulfilment of the ’-0100 Contract to produce vaccine falls to the
`Government. The effect of 28 U.S.C. § 1498 is to entirely relieve the contractor of liability for
`claims of patent infringement arising from the fulfillment of its contractual obligations, and as
`such, the contractor cannot be held liable for inducing or contributing to related infringement when
`section 1498 applies. See 28 U.S.C. § 1498(a) (“[T]he use or manufacture of an invention
`described in and covered by a patent of the United States by a contractor…or any person…shall
`be construed as use or manufacture for the United States.”); Richmond Screw Anchor Co. v. United
`States, 275 U.S. 331, 343 (1928); Crozier v. Fried. Krupp Aktiengesellschaft, 224 U.S. 290, 302,
`305 (1912); Leesona Corp. v. United States, 599 F.2d 958, 966–69 (Ct. Cl. 1979) (explaining
`§ 1498 and its history).
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`While we agree that the Court is the final authority as to whether to dismiss Plaintiffs’
`claim where the Government has granted its authorization and consent, section 1498 and the
`binding precedent interpreting it makes clear that the Government’s express grant of authorization
`and consent should generally be determinative of the issue. See Advanced Software Design Corp.
`v. Fed. Reserve Bank of St. Louis, 583 F.3d 1371, 1376 (Fed. Cir. 2009). Indeed, we are not aware
`of any case where a district court has refused to grant dismissal of claims after the Government
`asserted its “authorization and consent” pursuant to section 1498. See, e.g., IRIS Corp. v. Japan
`Airlines Corp., 769 F.3d 1359 (Fed. Cir. 2014); Arlton v. Aerovironment, Inc., No. 20-cv-7438,
`2021 WL 1589302 (C.D. Cal. Apr. 22, 2021).
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`As the Court correctly noted at the Initial Pretrial Conference, the Government is not a
`party to these proceedings. Accordingly, the Government takes no position on how the case should
`proceed with respect to scheduling or Plaintiffs’ remaining claims.
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` Respectfully submitted,
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`/s/ Philip Charles Sternhell
`PHILIP CHARLES STERNHELL
`Assistant Director
`Commercial Litigation Branch
`Civil Division
`U.S. Department of Justice
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`cc:
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`Clerk of the Court (by CM/ECF)
`All counsel of record (by CM/ECF)
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